We’re making another trim of a stock under pressure to protect hard-fought profits
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We’re selling 165 shares of Best Buy at roughly $86 each. Following Wednesday’s trade, Jim Cramer’s Charitable Trust will own 600 shares of BBY, decreasing its weighting to about 1.5% from 1.9%. Best Buy shares have been on a steady decline since October on concerns about electronic retail sales and the potential for higher tariffs on Chinese goods under President-elect Donald Trump ‘s new administration. There’s also a real estate component to Best Buy’s business, which needs housing turnover to pick up to recharge sales of big-ticket items such as appliances and home entertainment systems. With mortgage rates moving higher despite the Federal Reserve cutting interest rates, we trimmed our position when Best Buy traded around $90 per share in late October. BBY YTD mountain Best Buy YTD On Wednesday, however, we’re selling some Best Buy shares for another reason: discipline. We do not want to break our discipline of turning a hard-fought gain into a loss. Some of the problems facing Best Buy such as stubborn mortgages and artificial intelligence personal computers probably not selling as well as initially hoped may be temporary. However, we cannot risk our profits if the same-store sales inflection story hits a speed bump next Tuesday when the company reports earnings. That’s why we’re trimming our position even further — locking in an average gain of about 8% on stock purchased in early 2024. One more thing. If there’s a trend developing so far in this retail earnings season, it’s that the giants — including Walmart as well as Club names Amazon and Costco — are winning and taking huge amounts of market share. Target ‘s third-quarter profit miss is a share loss story, and its stock was being punished to the tune of more than 20% on Wednesday. Not everything is subject to disruption like off-price retailer and Club holding TJX Companies or a specialty retailer in Williams-Sonoma . But we have to acknowledge that Best Buy competes with the big three on electronics. (Jim Cramer’s Charitable Trust is long BBY, AMZN, COST, TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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